blackstone aquires stake in intelenet

MUMBAI: Private equity firm Blackstone that was in the race to acquire Intelenet is close to clinching the deal for $200 million that will give it a majority stake in the BPO. Intelenet, ranked among the top 15 BPOs in the country, was up for sale with both its partners, HDFC and Barclays Bank, interested in exiting their holdings. The BPO is a 50:50 partnership between the two. Sources familiar with the development confirmed that Blackstone was in advanced talks and the deal was likely to be concluded next week. “A few issues still remain to be ironed out,” said another source. Company officials could not be reached. The deal could possibly include a management buyout although no confirmation was available on this. The current management team includes senior members who have been with the company since its inception as a joint venture between Tata Consultancy Services and HDFC. They include CEO Susir Kumar and V-P (sales, solutions & transitions) Sandeep Aggarwal, among others. The valuation Intelenet gets could set the benchmark for the other BPO deals in the offing. Intelenet’s revenues are in the region of Rs 380 crore with an operating profit of around Rs 55 crore while Sparsh, its domestic BPO business that is a listed entity, reported revenues of Rs 87.44 crore and a net profit of Rs 87.3 lakh for the year ended March 2007. Among those BPOs where a stake sale is expected is the Citigroup captive, Citigroup Global Services. Earlier known as e-Serve International, it was also one of the earliest players in the BPO sector. It was a listed on the Indian stock exchanges but got de-listed in 2004. The Citi captive is expected to go the Genpact way. Genpact was a General Electric (GE) captive operation called GE Capital International Services (GECIS). Later, GE sold 60% in the firm to General Atlantic Partners and Oak Hill Capital Partners and also took on non-GE businesses to become a third-party captive. The firm has now filed for an IPO in the US. BPO exports from India were over $8 billion in FY07, up from $6.3 billion in FY06 and $4.6 billion in FY05, making it one of the fastest growing sectors in the country. Nearly all the top IT firms in the country also have BPO operations, and are bidding for the BPOs on the block.